Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OrthoPediatrics Corp (KIDS, Financial) reported a significant year-over-year revenue growth of 41% in Q1 2024, reaching $44.7 million.
- The company experienced a record number of 27,600 kids helped in Q1 2024, marking a 47% increase compared to the previous year.
- OrthoPediatrics Corp (KIDS) raised its full-year 2024 revenue guidance to $200 million to $203 million, representing a growth of 34% to 36%.
- The company saw strong international growth, particularly in Germany and Canada, with overall international revenue growth of 33%.
- OrthoPediatrics Corp (KIDS) continues to expand its product portfolio, with successful launches and strong sales in both trauma and deformity and scoliosis segments.
Negative Points
- Despite strong revenue growth, the company reported a gross profit margin decrease to 72% in Q1 2024 from 75% in Q1 2023, attributed to increased international set sales and less purchase price variance released.
- OrthoPediatrics Corp (KIDS) reported an adjusted EBITDA loss of $1.1 million in Q1 2024, although this was an improvement from a loss of $2.1 million in Q1 2023.
- The company faces uncertainties regarding the summer surgery seasons, which are typically larger months and can significantly impact financial results.
- Total operating expenses increased by $9.7 million or 30% to $41.9 million in Q1 2024, driven by incremental personnel costs and the addition of the Boston O&P acquisition.
- OrthoPediatrics Corp (KIDS) is still awaiting an audit to finalize its EU MDR status, which is necessary for launching several new products in Europe, potentially delaying market penetration in this region.
Q & A Highlights
Q: What are the expectations for OrthoPediatrics' growth and profitability for the remainder of 2024?
A: David Bailey, President and CEO, expressed confidence in continuing the company's momentum, with a focus on capturing market share, maintaining healthy margins, and exceeding EBITDA expectations. The company aims for robust top-line growth and is moving towards cash flow breakeven while executing strategic initiatives.
Q: Can you discuss the impact of the Boston O&P acquisition on OrthoPediatrics' strategy and operations?
A: David Bailey highlighted the significant interest from customers regarding the Boston O&P acquisition, indicating a strong market need for focused services in the bracing space. The company plans to expand these services nationally and expects to provide more detailed guidance on clinic expansion by fall.
Q: How is the European market shaping up for OrthoPediatrics, especially with pending product launches?
A: David Bailey mentioned that many of the company's recently developed products have not yet been launched in Europe. With an upcoming audit for EU MDR compliance, OrthoPediatrics anticipates launching several new products in Europe, which represents a significant growth opportunity.
Q: What are the plans for new product development and launches in the coming months?
A: David Bailey outlined several key products, including PMP tibia and Gyro, which are expected to drive growth. Additionally, the company is making progress in the early onset scoliosis space with new products like RESPONSE Ribbon pelvic and is awaiting FDA approval for other innovative devices.
Q: How does OrthoPediatrics view the current surgical environment and hospital capacities?
A: Fred Hite, CFO, noted that while there is some recovery from previous disruptions, the company has not factored significant increases in hospital capacity into their guidance. They are cautiously optimistic but do not anticipate a backlog of demand affecting their forecasts significantly.
Q: What is the significance of the FDA's breakthrough device designation for OrthoPediatrics' new growing spine device?
A: David Bailey emphasized that the designation is a strong endorsement of the device's potential and importance. It allows for direct communication with the FDA to expedite the approval process, which could significantly impact the treatment of complex pediatric conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
